Insurance / Insurance Planning
Life Insurance Coverage Needs (DIME Method)
DIME Method Explained
The DIME method calculates life insurance needs by adding four components:
- Debt: All outstanding debts (excluding mortgage)
- Income: Years of income replacement for your family
- Mortgage: Remaining mortgage balance
- Education: College costs for children
D - Debt & Final Expenses
Typical: $10,000-$20,000
I - Income Replacement
Typical: 5-10 years until children are independent
M - Mortgage Payoff
Leave blank if you don't want to pay off mortgage
E - Education Costs
4-year public: $100k, 4-year private: $200k+
Existing Assets & Coverage
These assets will be subtracted from your total need
DIME Method Guide
When to Use DIME Method:
- You have specific debts you want paid off
- You have children with future education needs
- You want a straightforward calculation
- You're comparing to income-replacement method
DIME vs Income Replacement:
- DIME: More comprehensive, includes specific goals (education, mortgage)
- Income Replacement: Simpler, multiplies income by 5-10x
- Best Practice: Calculate both, choose the higher number
Common Adjustments:
- Add $10k-20k for funeral and final expenses
- Consider childcare costs if stay-at-home parent needs coverage
- Factor in loss of benefits (healthcare through employer)
- Account for inflation on future college costs
Important: This calculator provides estimates. Consult with a licensed insurance professional for personalized recommendations.
See Also
Other calculators in Insurance Planning